NFL turns over every leaf in ongoing revenue hunt
Sep. 09, 2014
In the not-too-distant future, an American football fan could take a seat at the stadium, punch up any game on a seatback monitor, keep tabs on the real-time stats of a fantasy team, order up a hot dog and beer, and even have a brand-new jacket brought to the seat if the wind picks up.
This is the future of the NFL — the $9 billion league that kicked off the 2014 season last week and has plans on going bigger over the next decade.
Player agent Leigh Steinberg, who foresaw the TV explosion that bankrolled the NFL into the 21st century, views the stadium-as-marketplace concept as one of the natural and soon-to-come investments the league can make en route to making its next $9 billion.
Commissioner Roger Goodell is thinking even bigger — on record as saying he wants to grow the NFL into a $25 billion business by 2027.
Here are some places those billions could come from:
FUTURISTIC STADIUMS: Levi's Stadium in Santa Clara, California, with its Fantasy Football Lounge and Internet-friendly seating throughout, is just a starting point by Steinberg's estimate. He sees a day when do-everything monitors installed on seatbacks include high-quality audio that lets fans listen to coaches, the way they can hear the crew chief talking to the driver in a NASCAR race. And maybe someday, for a fee of course, fans will get to vote on what the next play call should be.
Crazy? Well, who'd have ever thought you'd pay big bucks to go to a game, simply so you could watch a bunch of other games? The NFL has spearheaded a league-wide project to improve stadium connectivity, knowing full well that the in-stadium experience had become limited because it allowed the fan to see only one game. In a fantasy-football world, one game at a time no longer suffices.
"I think this next generation of football fans comes out of a time where they've multi-tasked their whole life," Steinberg said. "They text, tweet, Instagram. They've got big bursts of color and sound coming over them and they have the delusion they can control every second of sensory stimulation with their thumb."
LOS ANGELES: So, if the Dallas Cowboys are worth $3 billion and the NBA's Los Angeles Clippers just sold for $2 billion, what would happen if the NFL finally gets around to bringing a team back to America's second-biggest city? "It's a gold mine that's been untapped," Steinberg said. And it might finally be time for the NFL to cash in.
Since the Rams and Raiders both left 20 years ago, the league has essentially used Los Angeles as leverage for every NFL city that balks at building an upgraded stadium for its current team. The biggest payoff, however, might come from a new team playing in a league-financed stadium. (That might have those in-seat TV monitors.) The expansion fee would essentially be pick-a-number, and that money would be distributed among the teams. Naming rights? If the league owned the stadium, its cash register would ring.
Yes, the slices of TV money would be further diluted with another team, but Steinberg believes, at worst, the value of the subsequent contract would increase with the LA market — population 18 million — in play. "If you have a well-run, well-marketed team in Los Angeles, the sky's the limit," Steinberg said.
EUROPE: Andrew Zimbalist, a sports economist at Smith College, thinks international expansion is the NFL's biggest money making opportunity. "You see the NFL reaching out its tentacles a little farther every year," he said. The league played its first regular-season game in London in 2007, and will hold three there this season. The natural progression would be to place a full-time team there and build a real fan base; there's a lot of talk that it will happen by the end of the decade.
"You get into Britain, then you have TV rights for England, and if you're expanding into the European Union, you've got another 300 million people to sell television rights to," Zimbalist said.
Though the NFL proclaims to disdain gambling, this tidbit out of Britain might have turned some heads: Bookmaker William Hill is predicting it will take around $33 million in wagers on the NFL this season, nearly doubling the handle from 2012.
NEW MEDIA: Verizon paid $1 billion over four seasons to stream games on mobile devices. Someday, the NFL might want to create its own network to handle this sort of business. Zimbalist doesn't think the exponential growth of wireless, phone and internet options for viewing games will last forever, and he also warns that it could cannibalize the TV audience, which could make the broadcasters wary. "Nothing the NFL does follows rational profit-and-loss economics," Steinberg says.
TV RIGHTS: And that, of course, brings it back to good old TV rights. The contracts that kick in this year will pay out around $7 billion a year through 2022. That's about a 60 percent increase over the last deals and around 15 times more than the contracts the networks were paying 30 years ago.
Nothing's certain, of course. The growth of wireless could make traditional TV contracts worth less. Still, NFL broadcasts fill the list of the U.S. top 10 most-viewed shows every week of the season. They are that increasingly rare live event that brings together an ever-fractionalized viewing audience. "Every single time these negotiations occur, you hear the networks say the same thing: 'We're being priced out of the business,'" Steinberg said. "Then, the numbers come out."